Selective Insurance Group Inc.

07/24/2026 | Press release | Distributed by Public on 07/24/2026 12:18

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements
The terms "Company," "we," "us," and "our" refer to Selective Insurance Group, Inc. (the "Parent") and its subsidiaries, except as expressly indicated or the context otherwise requires. Certain statements in this Quarterly Report on Form 10-Q, including information incorporated by reference, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). The PSLRA provides a safe harbor for forward-looking statements under the Securities Act of 1933 and the Securities Exchange Act of 1934.
Forward-looking statements include our expectations, intentions, beliefs, projections, estimates, or forecasts regarding future events or financial performance. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, activity levels, or performance to differ materially from those expressed or implied in the forward-looking statements. In some cases, forward-looking statements may be identified by words such as "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "believe," "intend," "estimate," "project," "predict," "potential," "pro forma," "seek," "target," "continue," or similar terms.
Forward-looking statements are predictions only, and we cannot guarantee that the expectations expressed in such statements will prove correct. We undertake no obligation to publicly update or revise any forward-looking statements, except as required by law.
We discuss factors that could cause actual results to differ materially from those expressed in forward-looking statements in Item 1A, "Risk Factors," of this Form 10-Q. These risk factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors may emerge at any time. We cannot predict these new factors, their potential impact on our business, or the extent to which any factor - or combination of factors - may cause actual results to differ materially from those expressed in forward-looking statements. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed in this report may not occur.
Introduction
We classify our business into four reportable segments:
•Standard Commercial Lines;
•Standard Personal Lines;
•Excess and Surplus Lines ("E&S Lines"); and
•Investments.
For additional information about these segments, refer to Note 9. "Segment Information" in Item 1. "Financial Statements." of this Form 10-Q and Note 12. "Segment Information" in Item 8. "Financial Statements and Supplementary Data." of our Annual Report on Form 10-K for the year ended December 31, 2025 ("2025 Annual Report").
We write our Standard Commercial and Standard Personal Lines products and services through nine of our insurance subsidiaries, some of which participate in the federal government's National Flood Insurance Program's ("NFIP") Write Your Own Program. We write our E&S products through another subsidiary, Mesa Underwriters Specialty Insurance Company, a nationally authorized non-admitted carrier for customers who generally cannot obtain coverage in the standard marketplace. Collectively, we refer to our ten insurance subsidiaries as the "Insurance Subsidiaries."
The following is Management's Discussion and Analysis ("MD&A") of our financial condition and consolidated results of operations, including an evaluation of the amounts and certainty of cash flows from operations and outside sources, trends, and uncertainties that may have a material impact in future periods. Investors should read the MD&A in conjunction with Item 1. "Financial Statements." of this Form 10-Q and the consolidated financial statements in our 2025 Annual Report filed with the United States ("U.S.") Securities and Exchange Commission.
In the MD&A, we discuss and analyze the following:
•Critical Accounting Policies and Estimates;
•Financial Highlights of Results for the second quarters ended June 30, 2026 ("Second Quarter 2026") and June 30, 2025 ("Second Quarter 2025"); and the six-month periods ended June 30, 2026 ("Six Months 2026") and June 30, 2025 ("Six Months 2025")
•Results of Operations and Related Information by Segment;
•Federal Income Taxes;
•Liquidity and Capital Resources; and
•Ratings.
Critical Accounting Policies and Estimates
Our unaudited interim consolidated financial statements include amounts for which we have made informed estimates and judgments for transactions not yet completed. These estimates and judgments affect the reported amounts in our consolidated financial statements. Our 2025 Annual Report outlines the estimates and judgments most critical to the preparation of the consolidated financial statements: (i) reserve for loss and loss expense; (ii) investment valuation and the allowance for credit losses on available-for-sale ("AFS") fixed income securities; and (iii) reinsurance. These estimates and judgments require our use of assumptions about highly uncertain matters that could change as facts and circumstances develop. Different estimates or judgments could result in materially different reported amounts. For additional information regarding our critical accounting policies and estimates, refer to pages 38 through 45 of our 2025 Annual Report.
Financial Highlights of Results for Second Quarter and Six Months 2026 and Second Quarter and Six Months 20251
Quarter ended
June 30, 		Change
% or Points 		Six Months ended
June 30, 		Change
% or Points
($ and shares in thousands, except per share amounts) 2026 2025 2026 2025
Financial Data:
Revenues
$ 1,387,035 1,326,745 5 % $ 2,745,960 2,611,931 5 %
After-tax net investment income 119,206 101,421 18 232,271 197,042 18
After-tax underwriting income (loss) 19,267 (1,914) (1,107) 36,051 34,139 6
Net income (loss) before federal income tax 162,845 108,905 50 287,047 247,791 16
Net income (loss) 129,385 85,943 51 227,061 195,839 16
Net income (loss) available to common stockholders 127,085 83,643 52 222,461 191,239 16
Key Metrics:
Combined ratio 98.0 % 100.2 (2.2) pts 98.1 % 98.2 (0.1) pts
Invested assets per dollar of common stockholders' equity $ 3.34 3.33 - % $ 3.34 3.33 - %
Annualized after-tax yield on investment portfolio 4.2 % 3.9 0.3 pts 4.1
%
3.9 0.2 pts
Return on common equity ("ROE") 14.8 10.7 4.1 13.0 12.5 0.5
Net premiums written ("NPW") to statutory surplus $ 1.30 1.45 (10) % $ 1.30 1.45 (10)
%
Per Common Share Amounts:
Diluted net income (loss) per share $ 2.11 1.36 55 % $ 3.69 3.12 18 %
Book value per share 58.13 52.09 12 58.13 52.09 12
Dividends declared per share to common stockholders 0.43 0.38 13 0.86 0.76 13
Non-GAAP Information:
Non-GAAP operating income (loss)2
$ 117,629 80,348 46 % $ 219,562 187,762 17 %
Non-GAAP operating income (loss) per diluted common share2
1.95 1.31 49 3.64 3.06 19
Non-GAAP operating ROE2
13.7 % 10.3 3.4 pts 12.8 % 12.3 0.5 pts
Adjusted book value per common share2
$ 60.56 54.48 11 % $ 60.56 54.48 11 %
1Refer to the Glossary of Terms attached to our 2025 Annual Report as Exhibit 99.1 for definitions of terms used in this Form 10-Q.
2Non-GAAP operating income (loss), non-GAAP operating income (loss) per diluted common share, and non-GAAP operating ROE are comparable to net income (loss) available to common stockholders, net income (loss) available to common stockholders per diluted common share, and ROE, respectively, but exclude after-tax net realized and unrealized gains and losses on investments included in net income (loss). Adjusted book value per common share is comparable to book value per common share, but excludes total after-tax unrealized gains and losses on investments included in accumulated other comprehensive income (loss). These non-GAAP measures are important financial measures used by us, analysts, and investors because the timing of realized and unrealized investment gains and losses on securities in any given period is largely discretionary. In addition, net realized and unrealized investment gains and losses on investments could distort the analysis of trends.
The tables below provide reconciliations of our GAAP to non-GAAP measures:
Reconciliation of net income (loss) available to common stockholders to non-GAAP operating income (loss)
Quarter ended
June 30, 		Six Months ended
June 30,
($ in thousands) 2026 2025 2026 2025
Net income (loss) available to common stockholders
$ 127,085 83,643 $ 222,461 191,239
Net realized and unrealized investment (gains) losses included in net income (loss), before tax
(11,971) (4,172) (3,670) (4,401)
Tax on reconciling items 2,515 877 771 924
Non-GAAP operating income (loss)
$ 117,629 80,348 $ 219,562 187,762
Reconciliation of net income (loss) available to common stockholders per diluted common share to non-GAAP operating income (loss) per diluted common share
Quarter ended
June 30, 		Six Months ended
June 30,
2026 2025 2026 2025
Net income (loss) available to common stockholders per diluted common share
$ 2.11 1.36 $ 3.69 3.12
Net realized and unrealized investment (gains) losses included in net income (loss), before tax
(0.20) (0.07) (0.06) (0.07)
Tax on reconciling items 0.04 0.02 0.01 0.01
Non-GAAP operating income (loss) per diluted common share
$ 1.95 1.31 $ 3.64 3.06
Reconciliation of ROE to non-GAAP operating ROE Quarter ended
June 30, 		Six Months ended
June 30,
2026 2025 2026 2025
ROE 14.8 % 10.7 13.0 % 12.5
Net realized and unrealized investment (gains) losses included in net income (loss), before tax
(1.4) (0.5) (0.2) (0.3)
Tax on reconciling items 0.3 0.1 - 0.1
Non-GAAP operating ROE 13.7 % 10.3 12.8 % 12.3
Reconciliation of book value per common share to adjusted book value per common share Quarter ended
June 30, 		Six Months ended
June 30,
2026 2025 2026 2025
Book value per common share $ 58.13 52.09 $ 58.13 52.09
Total unrealized investment (gains) losses included in accumulated other comprehensive income (loss), before tax 3.07 3.03 3.07 3.03
Tax on reconciling items (0.64) (0.64) (0.64) (0.64)
Adjusted book value per common share $ 60.56 54.48 $ 60.56 54.48
The following table depicts the components of ROE and non-GAAP operating ROE:
ROE and non-GAAP operating ROE Components Quarter ended
June 30, 		Change Points Six Months ended
June 30, 		Change Points
2026 2025 2026 2025
Standard Commercial Lines Segment 0.7 % (2.6) 3.3 0.3 % 0.4 (0.1)
Standard Personal Lines Segment 0.4 0.9 (0.5) 0.5 0.5 -
E&S Lines Segment 1.2 1.5 (0.3) 1.3 1.3 -
Total insurance operations 2.3 (0.2) 2.5 2.1 2.2 (0.1)
Net investment income earned
13.9 13.0 0.9 13.6 12.9 0.7
Net realized and unrealized investment gains (losses) 1.1 0.4 0.7 0.2 0.2 -
Total investments segment 15.0 13.4 1.6 13.8 13.1 0.7
Other (2.5) (2.5) - (2.9) (2.8) (0.1)
ROE 14.8 10.7 4.1 13.0 12.5 0.5
Net realized and unrealized investment (gains) losses, after tax (1.1) (0.4) (0.7) (0.2) (0.2) -
Non-GAAP operating ROE 13.7 10.3 3.4 12.8 12.3 0.5
In Second Quarter 2026, we delivered an ROE of 14.8% and a non-GAAP operating ROE of 13.7%, higher by 4.1 points and 3.4 points, respectively, compared to Second Quarter 2025. Improved underwriting results complemented strong after-tax investment income of $119 million. Our overall combined ratio of 98.0% for Second Quarter 2026 was 2.2 points better than 100.2% in Second Quarter 2025, primarily driven by (i) lower catastrophe and non-catastrophe property losses and (ii) no prior year casualty reserve development in any segment or line of business in Second Quarter 2026, compared to 3.8 points of unfavorable prior year casualty reserve development a year ago. These items were partially offset by 3.4 points of higher current year casualty loss costs. All three insurance segments profitably contributed to the 2.3 points of ROE from insurance operations in Second Quarter 2026, which was up 2.5 points from the prior-year quarter, primarily driven by improvement in our standard commercial lines segment.
On a year-to-date basis, our 13.0% ROE and 12.8% operating ROE were both higher than the 12.5% and 12.3%, respectively, generated in Six Months 2025. Stronger net investment income in Six Months 2026 drove the improvement.
Outlook
In Second Quarter 2026, we marked our eighth consecutive quarter of double-digit operating returns with an operating ROE of 13.7% and returned $58 million to common stockholders through regular dividends and opportunistic share repurchases, reinforcing our commitment to delivering long-term value. As Selective celebrated its 100th anniversary this year, we are proud of our history, the work our employees do, and the value we deliver our policyholders, distribution partners, and shareholders. We remain focused on a set of key priorities across the company to drive future success, including:
•Relentlessly improving on the fundamentals across risk selection, individual policy pricing, and claims outcomes. Risk selection, granular and accurate risk pricing, and prompt, fair claims adjudication are foundational capabilities we have built over many decades and remain focused on today.
•Diversifying revenue and income within and across our three insurance segments. Growth levers include achieving greater market share and segment diversification in Standard Commercial Lines, potential geographic expansion in Standard Personal Lines, and increasing our product and distribution capabilities in E&S Lines and other specialty lines.
•Further leveraging the use of data analytics and technology, including general-purpose, industry-trained, and agentic artificial intelligence ("AI") solutions, to drive operational efficiency and improved underwriting and claim outcomes. Early AI successes in claims, underwriting, and risk management are delivering measurable outcomes in accuracy, speed, and productivity, positioning us to responsibly scale AI across the organization. We have also made considerable progress in modernizing our policy acquisition and claims systems. For example, system enhancements in our E&S Lines segment have created significant operational efficiency, positioning us for premium growth with limited headcount additions.
•Building a connected, accountable, and empowered organization by developing talent and aligning on prioritized goals.
We remain committed to making strategic investments that fuel continued growth, innovation, and performance excellence. As we position ourselves for the future, we have several strategies to grow market share profitably over time:
•In our existing footprint, we are focused on growing with existing partners and strategically appointing new agency locations. During Six Months 2026, we added 100 agency locations and we had a net increase of 100 agency locations in 2025.
•Careful and deliberate geographic expansion. Since 2017, we have added fourteen states to our Standard Commercial Lines footprint, including Kansas in 2025. In Six Months 2026, these expansion states produced $242 million in premium, representing approximately 9% of total direct premiums written. We began writing business in Montana and Wyoming as of July 1, 2026.
Our full-year expectations for 2026 are as follows:
•A GAAP combined ratio of 96.5% to 97.5%, including net catastrophe losses of 6.0 points. Our combined ratio estimate assumes no prior year casualty reserve development, as we record our best estimate each quarter. We do not make assumptions about future reserve development;
•After-tax net investment income of $480 million, up from our initial guidance of $465 million;
•An overall effective tax rate of 21.5%; and
•Weighted average shares of 60.2 million on a fully diluted basis, reflecting the shares repurchased in Six Months 2026 and assuming no additional repurchases under our share repurchase authorization.
Results of Operations and Related Information by Segment
Insurance Operations
The following table provides quantitative information for analyzing the combined ratio:
All Lines Quarter ended
June 30, 		Change % or Points Six Months ended
June 30, 		Change % or Points
($ in thousands) 2026 2025 2026 2025
Insurance Operations Results:
NPW
$ 1,220,694 1,288,629 (5) % $ 2,446,202 2,529,072 (3) %
Net premiums earned ("NPE") 1,215,508 1,188,057 2 2,432,704 2,346,814 4
Less:
Loss and loss expense incurred 816,266 823,898 (1) 1,631,770 1,570,223 4
Net underwriting expenses incurred 374,363 365,431 2 754,110 731,243 3
Dividends to policyholders 490 1,151 (57) 1,190 2,134 (44)
Underwriting income (loss)
$ 24,389 (2,423) (1,107) % $ 45,634 43,214 6 %
Combined Ratios:
Loss and loss expense ratio 67.2 % 69.3 (2.1) pts 67.1 % 66.9 0.2 pts
Underwriting expense ratio 30.8 30.8 - 31.0 31.2 (0.2)
Dividends to policyholders ratio - 0.1 (0.1) - 0.1 (0.1)
Combined ratio 98.0 100.2 (2.2) 98.1 98.2 (0.1)
Lower NPW in Second Quarter 2026 and Six Months 2026 compared to the same prior-year periods reflect reduced new business in a competitive environment and deliberate actions to enhance underwriting profitability. Retention in our Standard Commercial Lines segment was down two points in both Second Quarter 2026 and Six Months 2026, reflecting our granular pricing actions to drive lower retention on underperforming business. While enhancing underwriting profitability is a primary focus, we are also executing on strategies to support future growth opportunities, including expanding our geographic footprint and broadening our E&S distribution capabilities with retail access.
Quarter ended
June 30, 		Six Months ended
June 30,
($ in millions) 2026 2025 2026 2025
Direct new business premiums $ 206.1 248.1 $ 420.0 499.4
Renewal pure price increases 6.5 % 9.9 6.8 % 10.1
Growth in NPE of 2% in Second Quarter 2026 and 4% in Six Months 2026 compared to the same prior-year periods is decelerating as the impact of lower NPW is materializing through the earnings process.
Loss and Loss Expenses
The following table provides quantitative information for analyzing loss and loss expense incurred:
Quarter ended
June 30, 		Change % or Points Six Months ended
June 30, 		Change % or Points
($ in thousands) 2026 2025 2026 2025
Loss and Loss Expense Incurred:
(Favorable) unfavorable prior year casualty reserve development $ - 45,000 (100) % $ - 50,000 (100) %
Current year casualty loss costs 577,229 525,727 10 1,139,324 1,044,999 9
Net catastrophe losses 68,539 79,932 (14) 143,889 123,289 17
Non-catastrophe property loss and loss expenses 170,498 173,239 (2) 348,557 351,935 (1)
Total loss and loss expense incurred 816,266 823,898 (1) 1,631,770 1,570,223 4
Impact on Loss and Loss Expense Ratio:
(Favorable) unfavorable prior year casualty reserve development -
%
3.8 (3.8)
pts
-
%
2.1 (2.1)
pts
Current year casualty loss costs 47.6 44.2 3.4 46.9 44.5 2.4
Net catastrophe losses 5.6 6.7 (1.1) 5.9 5.3 0.6
Non-catastrophe property loss and loss expenses 14.0 14.6 (0.6) 14.3 15.0 (0.7)
Total impact on loss and loss expense ratio
67.2 69.3 (2.1) 67.1 66.9 0.2
(Favorable)/Unfavorable Prior Year Casualty Reserve Development Quarter ended
June 30, 		Six Months ended
June 30,
($ in millions) 2026 2025 2026 2025
General liability $ - 20.0 $ - 20.0
Commercial automobile - 25.0 - 25.0
Total Standard Commercial Lines - 45.0 - 45.0
Personal automobile - - - 5.0
Total Standard Personal Lines - - - 5.0
Total (favorable) unfavorable prior year casualty reserve development
$ - 45.0 $ - 50.0
(Favorable) unfavorable impact on loss ratio
- pts 3.8 - pts 2.1
The loss and loss expense ratio decreased 2.1 points in Second Quarter 2026 compared to Second Quarter 2025, driven by (i) lower net catastrophe and non-catastrophe property losses reflecting less severe wind and convective storms impacting our footprint and (ii) no prior year casualty reserve development in Second Quarter 2026, compared to 3.8 points of unfavorable prior year casualty reserve development in the year-ago quarter. These items were partially offset by higher current year casualty loss costs.
In Six Months 2026, the loss and loss expense ratio increased 0.2 points compared to Six Months 2025, with higher current year loss costs and catastrophe losses predominantly offset by improvements in prior year casualty reserve development and non-catastrophe property losses.
There was no prior year casualty reserve development in any segment or line of business in Second Quarter 2026 or Six Months 2026. The unfavorable prior year casualty reserve development in Second Quarter 2025 and Six Months 2025 was primarily driven by (i) our commercial automobile line of business that experienced increased severities in accident years 2022 through 2024 and (ii) our general liability line of business that experienced increased severities in accident years 2022 and 2023.
Current year casualty loss costs were higher in Second Quarter 2026 and Six Months 2026 compared to the same prior-year periods, driven by elevated commercial automobile claim frequencies in the first half of the year and the increased loss trend assumptions that we recognized over the course of 2025 that are included in our expectations for 2026.
Standard Commercial Lines Segment
Quarter ended
June 30,
Change % or Points
Six Months ended
June 30,
Change % or Points
($ in thousands) 2026 2025 2026 2025
Insurance Segments Results:
NPW $ 961,850 1,018,004 (6) % $ 1,954,237 2,021,229 (3) %
NPE 962,044 937,635 3 1,927,803 1,849,845 4
Less:
Loss and loss expense incurred 652,249 666,766 (2) 1,309,083 1,248,432 5
Net underwriting expenses incurred 302,100 295,862 2 612,127 592,505 3
Dividends to policyholders 490 1,151 (57) 1,190 2,134 (44)
Underwriting income (loss)
7,205 (26,144) (128) $ 5,403 6,774 (20)
Combined Ratios:
Loss and loss expense ratio 67.8 % 71.1 (3.3) pts 67.8 % 67.5 0.3 pts
Underwriting expense ratio 31.4 31.6 (0.2) 31.8 32.0 (0.2)
Dividends to policyholders ratio 0.1 0.1 - 0.1 0.1 -
Combined ratio 99.3 102.8 (3.5) 99.7 99.6 0.1
Lower NPW in Second Quarter 2026 and Six Months 2026 compared Second Quarter 2025 and Six Months 2025 reflected reduced new business and targeted actions on our renewal portfolio. Stronger new business pricing, informed by our view of expected loss trends, combined with a competitive environment, drove lower acquisition rates on new business. We are leveraging our granular insights and differentiated operating model to drive higher renewal retention on our best-performing business and meaningfully lower retention on our poorer-performing business through appropriate rating actions. While overall rate increases have moderated and retention is lower than the prior-year period, we expect these mix improvement actions to contribute to improved profitability.
Quarter ended
June 30, 		Six Months ended
June 30,
($ in millions) 2026 2025 2026 2025
Direct new business premiums $ 124.0 158.2 $ 256.0 330.3
Retention 81 % 83 % 81 % 83
Renewal pure price increases 6.5 8.9 6.8 9.0
Growth in NPE of 3% in Second Quarter 2026 and 4% in Six Months 2026 compared to the same prior-year periods is decelerating as the impact of lower NPW is materializing through the earnings process.
Loss and Loss Expenses
The following table provides quantitative information for analyzing loss and loss expense incurred:
Quarter ended
June 30, 		Change % or Points Six Months ended
June 30, 		Change % or Points
($ in thousands) 2026 2025 2026 2025
Loss and Loss Expense Incurred:
(Favorable) unfavorable prior year casualty reserve development $ - 45,000 (100) % $ - 45,000 (100) %
Current year casualty loss costs 480,689 439,002 9 952,566 872,065 9
Net catastrophe losses 48,666 50,881 (4) 105,849 70,692 50
Non-catastrophe property loss and loss expenses 122,894 131,883 (7) 250,668 260,675 (4)
Total loss and loss expense incurred 652,249 666,766 (2) 1,309,083 1,248,432 5
Impact on Loss and Loss Expense Ratio:
(Favorable) unfavorable prior year casualty reserve development -
%
4.8 (4.8)
pts
-
%
2.4 (2.4)
pts
Current year casualty loss costs 49.9 46.8 3.1 49.3 47.2 2.1
Net catastrophe losses 5.1 5.4 (0.3) 5.5 3.8 1.7
Non-catastrophe property loss and loss expenses 12.8 14.1 (1.3) 13.0 14.1 (1.1)
Total impact on loss and loss expense ratio
67.8 71.1 (3.3) 67.8 67.5 0.3
The loss and loss expense ratio decreased 3.3 points in Second Quarter 2026 compared to Second Quarter 2025, primarily due to (i) no net prior year casualty reserve development in the current year quarter compared to 4.8-points of unfavorable prior year casualty reserve development in the year-ago quarter and (ii) lower non-catastrophe property losses, reflecting less severe wind and convective storms impacting our footprint in Second Quarter 2026 compared to Second Quarter 2025. These items were partially offset by higher current year casualty loss costs.
In Six Months 2026, the loss and loss expense ratio increased 0.3 points compared to Six Months 2025, with higher current year loss costs and catastrophe losses, predominantly offset by improvements in prior year casualty reserve development and non-catastrophe losses. The increase in catastrophe losses was driven by higher frequency and severity of winter storms and thunderstorm events that impacted our footprint this year compared to last, mainly in the first quarter of 2026.
The details of the prior year casualty reserve development by line of business were as follows:
(Favorable)/Unfavorable Prior Year Casualty Reserve Development Quarter ended
June 30, 		Six Months ended
June 30,
($ in millions)
2026 2025 2026 2025
General liability $ - 20.0 $ - 20.0
Commercial automobile - 25.0 - 25.0
Total Standard Commercial Lines
- 45.0 - 45.0
Prior year casualty reserve development in Second Quarter 2025 and Six Months 2025 reflected (i) increased severities in accident years 2022 through 2024 in our commercial automobile line of business, and (ii) increased severities in accident years 2022 and 2023 in our general liability line of business.
Higher current year casualty loss costs in Second Quarter 2026 and Six Months 2026 reflected the increased loss trend assumptions we recognized throughout 2025 and included in our expectations for 2026. Elevated severity trend assumptions attributable to social inflation on our general liability and commercial automobile liability lines of business, as well as elevated commercial automobile claim frequencies in the first half of 2026, drove the increase in current year casualty loss costs. Lower workers compensation loss trends provided a partial offset from decreasing claim frequencies in our 2026 expectations.
Information about our most significant Standard Commercial Lines of business follows:
General Liability
Quarter ended
June 30,
Change % or Points1
Six Months ended
June 30,
Change % or Points1
($ in thousands) 2026 2025 2026 2025
NPW $ 328,108 341,641 (4) % $ 662,165 675,537 (2) %
Direct new business 34,899 44,655 n/a 72,656 98,319 n/a
Retention 83 % 83 n/a 82 % 83 n/a
Renewal pure price increases 8.7 11.9 n/a 9.0 12.0 n/a
NPE $ 318,688 305,843 4 % $ 633,790 600,530 6 %
Underwriting income (loss)
(19,706) (31,295) (37) (43,508) (47,208) (8)
Combined ratio 106.2 % 110.2 (4.0) pts 106.9 % 107.9 (1.0) pts
% of total Standard Commercial Lines NPW 34 34 34 33
1n/a: not applicable.
NPW was down in Second Quarter 2026 and Six Months 2026 compared to the same prior-year periods, reflecting deliberate actions to enhance underwriting profitability. In sectors and markets where pricing does not align with our view of rate need, we are taking targeted underwriting actions, including (i) revising underwriting guidelines, (ii) tightening coverage offerings, and (iii) reducing writings.
Growth in NPE of 4% in Second Quarter 2026 and 6 % in Six Months 2026 is decelerating as the impact of lower NPW in 2026 is materializing through the earnings process.
The combined ratio decreased 4.0 points in Second Quarter 2026 and 1.0 in Six Months 2026 compared to the same prior-year periods, primarily driven by the following:
Quarter ended
June 30, 		Change % or Points Six Months ended
June 30,
Change % or Points
($ in thousands) 2026 2025 2026 2025
Loss and Loss Expense Incurred:
(Favorable) unfavorable prior year casualty reserve development $ - 20,000 (100) % $ - 20,000 (100) %
Current year casualty loss costs 238,105 220,610 8 473,110 434,284 9
Total loss and loss expense incurred 238,105 240,610 (1) 473,110 454,284 4
Impact on Loss and Loss Expense Ratio:
(Favorable) unfavorable prior year casualty reserve development -
%
6.5 (6.5)
pts
-
%
3.3 (3.3)
pts
Current year casualty loss costs 74.8 72.2 2.6 74.7 72.4 2.3
Total impact on loss and loss expense ratio
74.8 78.7 (3.9) 74.7 75.7 (1.0)
The general liability line of business has experienced a long-term historical trend of meaningful severity increases, partially offset by claim frequency decreases. We attribute the increased severities to elevated social inflation, which we view as an industry dynamic characterized by higher claimant propensity for attorney representation and litigation, longer settlement times, and higher settlement values. Certain jurisdictions with expanded liability theories and higher damage awards pose increased challenges. We are closely monitoring these jurisdictions and the broader trends across our business.
These dynamics have impacted our view of current year loss costs. The increased loss trend assumptions that we recognized over the course of 2025 that are included in our expectations for 2026, drove a 2.6-point increase in current year casualty loss costs in Second Quarter 2026 and a 2.3-point increase in Six Months 2026 compared to the same prior-year periods.
We did not record any prior year casualty reserve development in Second Quarter 2026 and Six Months 2026. We recorded $20.0 million of unfavorable prior year casualty reserve development in Second Quarter 2025 and Six Months 2025, which was driven by increased severities in accident years 2022 and 2023.
Commercial Automobile
Quarter ended
June 30,
Change % or Points1
Six Months ended
June 30,
Change % or Points1
($ in thousands) 2026 2025 2026 2025
NPW $ 289,879 312,966 (7) % $ 591,395 625,620 (5) %
Direct new business 27,463 41,996 n/a 55,931 87,866 n/a
Retention 80 % 83 n/a 81 % 84 n/a
Renewal pure price increases
9.3 10.4 n/a 9.2 10.5 n/a
NPE $ 291,411 288,759 1 % $ 587,791 572,344 3 %
Underwriting income (loss)
(5,349) (8,425) (37) 215 (781) (128)
Combined ratio 101.8 % 102.9 (1.1) pts 100.0 % 100.1 (0.1) pts
% of total Standard Commercial Lines NPW 30 31 30 31
1n/a: not applicable.
NPW decreased 7% in Second Quarter 2026 and 5% in Six Months 2026 compared to the same prior-year periods, driven by underwriting actions to improve profitability, such as achieving renewal pure price increases and tightening underwriting guidelines for fleet exposures. Lower renewal pure price increases this year compared to last were driven by a reduction in rates for physical damage that were partially offset by higher commercial automobile liability rates.
Growth in NPE of 1% in Second Quarter 2026 and 3% in Six Months 2026 compared to the same prior-year periods is decelerating as the impact of lower NPW in 2026 is materializing through the earnings process.
The combined ratio decreased 1.1 points in Second Quarter 2026 and 0.1 points in Six Months 2026 compared to the same prior-year periods, and included the following:
Quarter ended
June 30,
Change % or Points
Six Months ended
June 30,
Change % or Points
($ in thousands) 2026 2025 2026 2025
Loss and Loss Expense Incurred:
(Favorable) unfavorable prior year casualty reserve development $ - 25,000 (100) % $ - 25,000 (100) %
Current year casualty loss costs 169,780 141,819 20 332,500 286,558 16
Net catastrophe losses 2,390 4,134 (42) 2,783 5,611 (50)
Non-catastrophe property loss and loss expenses 38,563 40,697 (5) 76,850 83,245 (8)
Total loss and loss expense incurred 210,733 211,650 - 412,133 400,414 3
Impact on Loss and Loss Expense Ratio:
(Favorable) unfavorable prior year casualty reserve development - % 8.7 (8.7)
pts
- % 4.4 (4.4)
pts
Current year casualty loss costs 58.2 49.1 9.1 56.6 50.0 6.6
Net catastrophe losses 0.8 1.4 (0.6) 0.5 1.0 (0.5)
Non-catastrophe property loss and loss expenses 13.2 14.1 (0.9) 13.1 14.5 (1.4)
Total impact on loss and loss expense ratio
72.2 73.3 (1.1) 70.2 69.9 0.3
We did not record any prior year casualty reserve development in Second Quarter 2026 and Six Months 2026, compared to $25.0 million recorded in Second Quarter 2025 and Six Months 2025. Current year casualty loss costs were higher in Second Quarter 2026 and Six Months 2026 compared to the same prior-year periods, driven by elevated claim frequencies in the first half of the year and the increased loss trend assumptions we recognized throughout 2025 that are included in our expectations for 2026.
In the aggregate, net catastrophe and non-catastrophe property losses were 1.5-points lower in Second Quarter 2026 and 1.9- points lower in Six Months 2026 compared to the same prior-year periods, and provided a partial offset to the increase in current year loss costs. This reduction was driven by (i) the earned impact of renewal pure price increases and (ii) period-to-period variability of catastrophe and non-catastrophe property losses.
Commercial Property1
Quarter ended
June 30,
Change % or Points2
Six Months ended
June 30,
Change % or Points2
($ in thousands) 2026 2025 2026 2025
NPW $ 198,984 207,930 (4) % $ 397,819 404,184 (2) %
Direct new business 40,550 43,137 n/a 82,576 84,553 n/a
Retention 80 % 81 n/a 80 % 82 n/a
Renewal pure price increases
3.6 7.8 n/a 4.3 8.1 n/a
NPE $ 198,475 191,027 4 % $ 400,109 377,557 6 %
Underwriting income (loss)
20,214 7,441 172 27,180 37,453 (27)
Combined ratio 89.8 % 96.1 (6.3) pts 93.2 % 90.1 3.1 pts
% of total Standard Commercial Lines NPW 21 20 20 20
1Includes Inland Marine.
2n/a: not applicable.
NPW decreased 4% in Second Quarter 2026 and 2% Six Months 2026 compared to the same prior-year periods, reflecting lower new business and deliberate actions to strengthen underwriting profitability.
Growth in NPE of 4% in Second Quarter 2026 and 6% in Six Months 2026 continued to reflect the impact of NPW growth through the first quarter of 2026, but is pressured by the impact of lower NPW this quarter.
The combined ratio decreased 6.3 points in Second Quarter 2026 compared to Second Quarter 2025, and increased 3.1 points in Six Months 2026 compared to Six Months 2025, and included the following:
Second Quarter 2026 Second Quarter 2025
($ in thousands)
Loss and Loss Expense Incurred Impact on
Combined Ratio 		Loss and Loss Expense Incurred Impact on
Combined Ratio 		Change in Ratio
Net catastrophe losses $ 41,418 20.9 pts 33,938 17.8 3.1 pts
Non-catastrophe property loss and loss expenses 68,385 34.5 83,204 43.6 (9.1)
Total $ 109,803 55.4 117,142 61.4 (6.0)
Six Months 2026 Six Months 2025
($ in thousands)
Loss and Loss Expense Incurred Impact on
Combined Ratio 		Loss and Loss Expense Incurred Impact on
Combined Ratio 		Change in Ratio
Net catastrophe losses $ 91,294 22.8 pts 50,300 13.3 9.5 pts
Non-catastrophe property loss and loss expenses 145,364 36.3 159,778 42.3 (6.0)
Total $ 236,658 59.1 210,078 55.6 3.5
In the aggregate, net catastrophe and non-catastrophe property losses were lower in Second Quarter 2026 compared to Second Quarter 2025, but were higher in Six Months 2026 compared to Six Months 2025. The increase in net catastrophe losses was driven by higher frequency and severity of winter storms and thunderstorm events that impacted our footprint this year compared to last, mainly in the first quarter of 2026.
Workers Compensation
Quarter ended
June 30,
Change % or Points1
Six Months ended
June 30,
Change % or Points1
($ in thousands) 2026 2025 2026 2025
NPW $ 76,619 83,003 (8) % $ 159,313 169,149 (6) %
Direct new business 8,718 12,103 n/a 17,547 25,837 n/a
Retention 81 % 83 n/a 82 % 84 n/a
Renewal pure price increases (decreases) (4.0) (4.3) n/a (3.4) (3.7) n/a
NPE $ 81,906 82,024 - % $ 161,727 161,060 - %
Underwriting income (loss)
2,848 (2,900) (198) 1,757 (7,578) (123)
Combined ratio 96.5 % 103.5 (7.0) pts 98.9 % 104.7 (5.8) pts
% of total Standard Commercial Lines NPW 8 8 8 8
1n/a: not applicable.
NPW decreased 8% in Second Quarter 2026 and 6% in Six Months 2026 compared to the same prior-year periods, primarily due to negative rate changes. These rate level reductions were driven by continued decreases in workers compensation rating bureau loss costs, which form the basis for our filed rating plans, and heavily influence marketplace pricing for this line of business. Additionally, retention is down compared to the same prior-year periods, resulting from underwriting actions taken to improve profitability.
The combined ratio decreased 7.0 points in Second Quarter 2026 and 5.8 points in Six Months 2026 compared to the same prior-year periods and included the following:
Second Quarter 2026 Second Quarter 2025
($ in thousands)
Loss and Loss Expense Incurred Impact on
Combined Ratio 		Loss and Loss Expense Incurred Impact on
Combined Ratio 		Change in Ratio
(Favorable) unfavorable prior year casualty reserve development $ - - pts - - - pts
Current year casualty loss costs 58,812 71.8 63,284 77.1 (5.3)
Total
$ 58,812 71.8 $ 63,284 77.1 (5.3)
Six Months 2026 Six Months 2025
($ in thousands)
Loss and Loss Expense Incurred Impact on
Combined Ratio 		Loss and Loss Expense Incurred Impact on
Combined Ratio 		Change in Ratio
(Favorable) unfavorable prior year casualty reserve development $ - - pts - - - pts
Current year casualty loss costs 118,862 73.5 124,827 77.5 (4.0)
Total $ 118,862 73.5 $ 124,827 77.5 (4.0)
Lower current year casualty loss costs in Second Quarter 2026 and Six Months 2026 compared to the same prior-year periods were primarily driven by decreased claim frequencies leading to improved loss trends. In addition, the combined ratio benefited from a 2.1-point reduction in underwriting expenses in Second Quarter 2026 and a 1.8-point reduction in Six Months 2026 compared to the same prior-year periods, which was primarily driven by lower commissions on this line of business.
Standard Personal Lines Segment
Quarter ended
June 30,
Change % or Points
Six Months ended
June 30,
Change % or Points
($ in thousands) 2026 2025 2026 2025
Insurance Segments Results:
NPW $ 101,502 110,456 (8) % $ 183,971 197,969 (7) %
NPE 97,639 102,377 (5) 197,667 206,032 (4)
Less:
Loss and loss expense incurred 69,004 69,977 (1) 138,303 146,646 (6)
Net underwriting expenses incurred 24,207 23,850 1 47,778 48,799 (2)
Underwriting income (loss) $ 4,428 8,550 (48) $ 11,586 10,587 9
Combined Ratios:
Loss and loss expense ratio 70.7 % 68.3 2.4 pts 69.9 % 71.2 (1.3) pts
Underwriting expense ratio 24.8 23.3 1.5 24.2 23.7 0.5
Combined ratio 95.5 91.6 3.9 94.1 94.9 (0.8)
Lower NPW and NPE in Second Quarter 2026 and Six Months 2026 compared to the same prior-year periods was driven by reductions in direct new business and lower renewal pure price increases. New business decreased 36% in Second Quarter 2026 and 27% in Six Months 2026 compared to the same prior-year periods, driven by (i) market conditions, including an increasingly competitive market for auto insurance and (ii) restrictions we have in place to manage overall growth in the State of New Jersey. We have received regulatory approvals for increased rate levels in most of our footprint states and are focused on growth in our target market segment where we believe our rates are adequate. In Second Quarter 2026 and Six Months 2026 we achieved renewal pure price increases of 8.9% and 9.6%, respectively. Additionally, we continue to focus our efforts on our target mass affluent market, with 98% of new business through Six Months 2026 being in our target market.
The following table depicts direct new business, retention, and renewal pure price increases for the Second Quarter 2026 and Six Months 2026:
Quarter ended
June 30, 		Change
% or
Points 		Six Months ended
June 30, 		Change
% or
Points
($ in millions) 2026 2025 2026 2025
Direct new business premiums1
$ 8.3 12.9 (36) % $ 15.8 21.8 (27) %
Retention 79 % 79 - pts 79 % 77 2 pts
Renewal pure price increases 8.9 19.0 (10.1) 9.6 21.3 (11.7)
1Excludes our Flood direct premiums written, which are 100% ceded to the NFIP and do not impact NPW.
Loss and Loss Expenses
The following table provides quantitative information for analyzing loss and loss expense incurred:
Quarter ended
June 30, 		Change % or Points Six Months ended
June 30, 		Change % or Points
($ in thousands) 2026 2025 2026 2025
Loss and Loss Expense Incurred:
(Favorable) unfavorable prior year casualty reserve development $ - - n/a % $ - 5,000 (100) %
Current year casualty loss costs 25,872 27,115 (5) 52,716 55,183 (4)
Net catastrophe losses 11,937 14,591 (18) 25,137 21,704 16
Non-catastrophe property loss and loss expenses 31,195 28,271 10 60,450 64,759 (7)
Total loss and loss expense incurred 69,004 69,977 (1) 138,303 146,646 (6)
Impact on Loss and Loss Expense Ratio:
(Favorable) unfavorable prior year casualty reserve development - % - -
pts
- % 2.4 (2.4)
pts
Current year casualty loss costs 26.6 26.4 0.2 26.6 26.9 (0.3)
Net catastrophe losses 12.2 14.3 (2.1) 12.7 10.5 2.2
Non-catastrophe property loss and loss expenses 31.9 27.6 4.3 30.6 31.4 (0.8)
Total impact on loss and loss expense ratio
70.7 68.3 2.4 69.9 71.2 (1.3)
The loss and loss expense ratio increased 2.4 points in Second Quarter 2026 compared to Second Quarter 2025, primarily driven by higher non-catastrophe losses due to normal period-to-period variability of such losses. Non-catastrophe losses were partially offset by net catastrophe losses that were lower in Second Quarter 2026 compared to Second Quarter 2025 due to lower frequency and severity of weather-related catastrophe events this year compared to last year.
The 1.3-point decrease in the loss and loss expense ratio in Six Months 2026 compared to Six Months 2025 was driven primarily by the absence of prior year casualty reserve development as illustrated in the table below:
(Favorable)/Unfavorable Prior Year Casualty Reserve Development Quarter ended
June 30, 		Six Months ended
June 30,
($ in millions) 2026 2025 2026 2025
Homeowners $ - - - -
Personal automobile - - - 5.0
Total Standard Personal Lines - - - 5.0
The $5.0 million of unfavorable prior year casualty reserve development in Six Months 2025 was primarily driven by increased severities in accident year 2024 related to the New Jersey portfolio.
Underwriting Expenses
Our underwriting expense ratio increased 1.5 points and 0.5 points in Second Quarter 2026 and Six Months 2026, respectively, compared to the prior year periods, as lower NPE has put pressure on our underwriting expense ratio.
E&S Lines Segment
Quarter ended
June 30, 		Change % or Points Six Months ended
June 30,
Change % or Points
($ in thousands) 2026 2025 2026 2025
Insurance Segments Results:
NPW $ 157,342 160,169 (2) % $ 307,994 309,874 (1) %
NPE 155,825 148,045 5 307,234 290,937 6
Less:
Loss and loss expense incurred 95,013 87,155 9 184,384 175,145 5
Net underwriting expenses incurred 48,056 45,719 5 94,205 89,939 5
Underwriting income (loss) 12,756 15,171 (16) 28,645 25,853 11
Combined Ratios:
Loss and loss expense ratio 61.0 % 58.9 2.1 pts 60.0 % 60.2 (0.2) pts
Underwriting expense ratio 30.8 30.9 (0.1) 30.7 30.9 (0.2)
Combined ratio 91.8 89.8 2.0 90.7 91.1 (0.4)
Increased competition in the marketplace and our continued underwriting discipline contributed to a decline in NPW of 2% in Second Quarter 2026 and 1% in Six Months 2026 compared to the same prior-year periods. This NPW decline was primarily due to more capacity entering the excess and surplus lines marketplace and the admitted markets' expansion in appetite for business previously written by excess and surplus lines companies. NPW includes the impact of the following:
Quarter ended
June 30, 		Change
% or
Points 		Six Months ended
June 30, 		Change
% or
Points
($ in millions) 2026 2025 2026 2025
Direct new business premiums $ 73.8 77.0 (4) % $ 148.2 147.2 1 %
Retention 62 % 65 (3) 61 % 65 (4)
Renewal pure price increases 3.4 9.3 (5.9) 3.6 9.0 (5.4)
Despite the decline in NPW during 2026, NPE grew 5% in Second Quarter 2026 and 6% in Six Months 2026 compared to the same prior-year periods, driven by growth in NPW in 2025 and the corresponding earnings of those premiums written.
Loss and Loss Expenses
The following table provides quantitative information for analyzing loss and loss expense incurred:
Quarter ended
June 30, 		Change % or Points Six Months ended
June 30, 		Change % or Points
($ in thousands) 2026 2025 2026 2025
Loss and Loss Expense Incurred:
Current year casualty loss costs $ 70,668 59,610 19
%
$ 134,042 117,751 14
%
Net catastrophe losses 7,936 14,460 (45) 12,903 30,893 (58)
Non-catastrophe property loss and loss expenses 16,409 13,085 25 37,439 26,501 41
Total loss and loss expense incurred 95,013 87,155 9 184,384 175,145 5
Impact on Loss and Loss Expense Ratio:
Current year casualty loss costs 45.4
%
40.3 5.1
pts
43.6
%
40.5 3.1
pts
Net catastrophe losses 5.1 9.8 (4.7) 4.2 10.6 (6.4)
Non-catastrophe property loss and loss expenses 10.5 8.8 1.7 12.2 9.1 3.1
Total impact on loss and loss expense ratio
61.0 58.9 2.1 60.0 60.2 (0.2)
The loss and loss expense ratio increased 2.1 points in Second Quarter 2026 and decreased 0.2 points in Six Months 2026 compared to the same prior-year periods. In both Second Quarter 2026 and Six Months 2026, the loss and loss expense ratio was increased by (i) higher current year casualty loss costs, primarily driven by higher embedded severity assumptions due to social inflation and (ii) higher non-catastrophe property loss and loss expenses, reflecting normal period-to-period variability associated with property losses. Net catastrophe losses provided an offset to these items in both periods, with Six Months 2026 having a larger offset as the California Palisades Fire impacted the first quarter of 2025.
Reinsurance
We successfully completed negotiations of our July 1, 2026 excess of loss treaties that cover Standard Commercial Lines, Standard Personal Lines, and E&S Lines.
We renewed the Casualty Excess of Loss Treaty ("Casualty Treaty") with coverage for $87 million in excess of a $3 million retention per loss occurrence, which is the same as the expiring treaty. We continue to retain a portion of the first layer through an 8% co-participation, compared to a 20% co-participation in the expiring treaty. The 2026 treaty year deposit premium increased primarily due to increased premium rates and lower co-participation in the first layer.
We also renewed the Property Excess of Loss Treaty ("Property Treaty") with the same retention as the expiring treaty, but with a $20 million increase in limit. The treaty now provides coverage for $115 million in excess of a $5 million retention for losses on a per-risk basis. The treaty year deposit premium decreased modestly, primarily driven by a reduction in rates.
The following table summarizes the Casualty Treaty and Property Treaty arrangements covering our Insurance Subsidiaries:
Treaty Name Reinsurance Coverage Terrorism Coverage
Casualty Treaty (covers all insurance operations)
There are six layers covering $87 million in excess of $3 million. Losses other than terrorism losses are subject to the following:
- 92% of $3 million in excess of $3 million layer provides 81 reinstatements, $246 million annual aggregate limit;
- 100% of $6 million in excess of $6 million layer provides 15 reinstatements, $96 million annual aggregate limit;
- 100% of $9 million in excess of $12 million layer provides three reinstatements, $36 million annual aggregate limit;
- 100% of $9 million in excess of $21 million layer provides one reinstatement, $18 million annual aggregate limit;
- 100% of $20 million in excess of $30 million layer provides one reinstatement, $40 million annual aggregate limit; and
- 100% of $40 million in excess of $50 million layer provides one reinstatement, $80 million annual aggregate limit.
x.x
All NBCR losses are excluded. All other losses stemming from the acts of terrorism are subject to the following:
- 92% of $3 million in excess of $3 million layer with $15 million net annual terrorism aggregate limit;
- 100% of $6 million in excess of $6 million layer with $30 million net annual terrorism aggregate limit;
- 100% of $9 million in excess of $12 million layer with $27 million net annual terrorism aggregate limit;
- 100% of $9 million in excess of $21 million layer with $18 million net annual terrorism aggregate limit;
- 100% of $20 million in excess of $30 million layer with $40 million net annual terrorism aggregate limit; and
- 100% of $40 million in excess of $50 million layer with $80 million net annual terrorism aggregate limit.
Property Treaty (covers all insurance operations)
There are three layers covering 100% of $115 million in excess of $5 million. Losses other than Terrorism Risk Insurance Program Reauthorization Act ("TRIPRA") certified losses are subject to the following reinstatements and annual aggregate limits:
- $5 million in excess of $5 million layer provides 15 reinstatements, $80 million in aggregate limits;
- $30 million in excess of $10 million layer provides four reinstatements, $150 million in aggregate limits; and
- $80 million in excess of $40 million layer provides one reinstatement, $160 million in aggregate limits.
All nuclear, biological, chemical, and radioactive ("NBCR") losses are excluded regardless of whether or not they are certified under the TRIPRA. For non-NBCR losses, the treaty distinguishes between acts committed on behalf of foreign persons or foreign interests ("Foreign Terrorism") and those that are not. The treaty provides annual aggregate limits for Foreign Terrorism (other than NBCR) acts of $15 million for the first layer, $60 million for the second layer, and $80 million for the third layer. Non-Foreign Terrorism losses (other than NBCR) are covered to the same extent as non-terrorism losses.
Investments
Our Investments segment's objectives are to maximize the economic value of our investment portfolio by achieving stable, risk-adjusted after-tax net investment income and generating long-term growth in book value per share. Our strategies consider prevailing market conditions, our enterprise risk tolerances, and other risk implications by:
•Maximizing the portfolio's overall total return by investing (i) the premiums from our insurance operations, (ii) amounts generated through our capital management strategies, including debt and equity security issuances, and (iii) profits of our business, and
•Maintaining (i) a well-diversified portfolio across issuers, sectors, and asset classes and (ii) a fixed income securities portfolio with high credit quality and acceptable duration and maturity profiles to provide ample liquidity.
The effective duration of our fixed income and short-term investments was 4.3 years as of June 30, 2026. We monitor and manage the effective duration to maximize yield while managing interest rate risk at an acceptable level. We buy and sell investments with the intent of maximizing investment returns in the current market environment, while balancing capital preservation and ensuring adequate liquidity to support our insurance business.
Our fixed income and short-term investments represented 91% of invested assets at June 30, 2026, and 92% at December 31, 2025. Our fixed income and short-term investments portfolio had a weighted average credit rating of "A+" and investment grade holdings represented 97% of the total fixed income and short-term investment portfolio on both dates.
For further details on the composition, credit quality, and various risks to which our portfolio is subject, see Item 7A. "Quantitative and Qualitative Disclosures About Market Risk." of our 2025 Annual Report.
Total Invested Assets
($ in thousands) June 30, 2026 December 31, 2025 Change
Total invested assets $ 11,576,860 11,302,440 2 %
Invested assets per dollar of common stockholders' equity 3.34 3.32 1
Components of unrealized gains (losses) - before tax:
Fixed income securities (182,961) (88,415) 107 %
Equity securities 35,626 14,311 149
Net unrealized gains (losses) - before tax (147,335) (74,104) 99
Components of unrealized gains (losses) - after tax:
Fixed income securities (144,539) (69,848) 107
Equity securities 28,145 11,306 149
Net unrealized gains (losses) - after tax (116,394) (58,542) 99
Invested assets increased $274.4 million at June 30, 2026, compared to December 31, 2025, primarily reflecting our active investment of operating cash flows, which were 18% of NPW in Six Months 2026, partially offset by a $94.5 million increase in pre-tax net unrealized losses in our fixed income portfolio primarily due to higher interest rates at June 30, 2026 compared to December 31, 2025.
Net Investment Income
Net investment income earned components were as follows:
Quarter ended
June 30, 		Change
% or Points 		Six Months ended
June 30, 		Change
% or Points
($ in thousands) 2026 2025 2026 2025
Fixed income securities $ 134,641 115,733 16 % $ 261,268 220,815 18 %
Commercial mortgage loans ("CMLs") 4,086 3,761 9 8,315 7,376 13
Equity securities 5,520 4,908 12 9,722 8,475 15
Short-term investments 3,157 5,267 (40) 8,697 11,500 (24)
Alternative investments 8,608 4,004 115 15,483 11,083 40
Other investments 446 163 174 486 394 23
Investment expenses (6,291) (5,868) 7 (11,421) (10,984) 4
Net investment income earned - before tax 150,167 127,968 17 292,550 248,659 18
Net investment income tax expense (30,961) (26,547) 17 (60,279) (51,617) 17
Net investment income earned - after tax $ 119,206 101,421 18 $ 232,271 197,042 18
Effective tax rate 20.6 % 20.7 (0.1) pts 20.6 % 20.8 (0.2) pts
Annualized after-tax yield on fixed income investments 4.4 4.2 0.2 4.3 4.1 0.2
Annualized after-tax yield on investment portfolio 4.2 3.9 0.3 4.1 3.9 0.2
After-tax net investment income earned increased 18% in both Second Quarter 2026 and Six Months 2026 compared to the same prior-year periods, primarily driven by (i) active portfolio management resulting in higher after-tax portfolio yield and (ii) operating cash flow deployment.
Realized and Unrealized Gains and Losses
When evaluating securities for sale, our general philosophy is to reduce our exposure to securities and sectors based on economic evaluations of whether (i) the fundamentals for that security or sector have deteriorated or (ii) the timing is appropriate to trade opportunistically for other securities with better economic-return characteristics. Net realized and unrealized gains and losses for the indicated periods were as follows:
Quarter ended
June 30, 		Change
% 		Six Months ended
June 30, 		Change
%
($ in thousands) 2026 2025 2026 2025
Net realized gains (losses) on disposals $ (3,219) (240) 1,241 % $ (4,452) (896) 397 %
Net unrealized gains (losses) on equity securities 19,845 3,640 445 21,315 4,690 354
Net credit loss benefit (expense) on fixed income investments
(4,651) 772 (702) (12,805) 1,366 (1,037)
Losses on securities for which we have the intent to sell (4) - 100 (388) (759) (49)
Total net realized and unrealized investment gains (losses) $ 11,971 4,172 187 $ 3,670 4,401 (17)
The change in net realized and unrealized investment gains in Second Quarter 2026 and Six Months 2026, compared to the same prior-year periods, was primarily due to an increase in valuations reflecting the current public equities market. The increase in unrealized gains on equity securities in Six Months 2026, compared to Six Months 2025, was partially offset by an increase in net credit loss expense on fixed income investments, primarily driven by higher interest rates in Six Months 2026 compared to Six Months 2025. The higher interest rates increased unrealized losses on our fixed income investments, thereby increasing the amount of recognized credit losses.
Income Taxes
The following table provides information regarding income taxes.
Quarter ended
June 30, 		Six Months ended
June 30,
($ in millions) 2026 2025 2026 2025
Income tax expense
$ 33.5 23.0 $ 60.0 52.0
Effective tax rate1
20.8 % 21.5 21.2 % 21.4
1The effective tax rate is calculated by taking "Total income tax expense (benefit)" divided by "Income (loss) before income tax" less "Preferred stock dividends" on our Consolidated Statements of Income.
Liquidity and Capital Resources
Capital resources and liquidity reflect our ability to generate cash flows from business operations, borrow funds at competitive rates, and raise new capital to meet our operating and growth needs.
Liquidity
We manage liquidity by generating sufficient cash flows to meet our business operations' short-term and long-term cash requirements. We adjust our liquidity requirements based on economic conditions, market conditions, and future cash flow commitments, as discussed further below.
Sources of Liquidity
The Parent's sources of cash historically have consisted of dividends from the Insurance Subsidiaries, the Parent's investment portfolio, borrowings under third-party lines of credit, intercompany revolving demand loan agreements with certain Insurance Subsidiaries, and the issuance of equity (common or preferred) and debt securities. We continue to monitor these sources, considering our short-term and long-term liquidity and capital preservation strategies.
The Parent's cash and components of its investment portfolio were as follows:
($ in thousands) June 30, 2026 December 31, 2025
Fixed income securities $ 221,565 254,851
Equity securities 51,177 49,978
Short-term investments 97,111 78,973
Alternative investments 21,416 21,603
Cash 100 248
Total investments and cash $ 391,369 405,653
Short-term investments have historically been maintained in "AAA" rated money market funds and fixed income securities are comprised of high-quality, liquid government and corporate securities.
The amount and composition of the Parent's investment portfolio may change over time based on various factors, including the amount and availability of dividends from our Insurance Subsidiaries, investment income, expenses, other Parent cash needs, such as dividends payable to stockholders, asset allocation investment decisions, inorganic growth opportunities, debt retirement, and share repurchases. We have an established target for the Parent to maintain liquid investments of at least twice its expected annual net cash outflow needs.
Insurance Subsidiary Dividends
The Insurance Subsidiaries generate liquidity through insurance float, created by collecting premiums and earning investment income before paying claims. The float period can extend over many years. Our investment portfolio consists of securities with maturity dates that continually provide a source of cash flow for claims payments in the ordinary course of business. To protect our Insurance Subsidiaries' capital, we purchase reinsurance coverage for significantly large claims or catastrophes that may occur.
The Insurance Subsidiaries paid $140 million in total dividends to the Parent in Six Months 2026. As of December 31, 2025, our allowable ordinary maximum dividend is $466 million for 2026. All Insurance Subsidiary dividends to the Parent are (i) subject to the approval and/or review of its domiciliary state insurance regulator and (ii) generally payable only from earned statutory surplus reported in its annual statements as of the preceding December 31. Although domiciliary state insurance regulators have historically approved Insurance Subsidiary dividends, there is no assurance they will approve future dividends.
New Jersey corporate law also limits the maximum amount of dividends the Parent can pay our stockholders if either (i) the Parent would be unable to pay its debts as they become due in the usual course of business or (ii) the Parent's total assets would be less than its total liabilities. The Parent's ability to pay dividends to stockholders is also impacted by (i) covenants in its credit agreement that obligate it, among other things, to maintain a minimum consolidated net worth and a maximum ratio of consolidated debt to total capitalization, and (ii) the terms of our preferred stock that prohibit dividends from being declared or paid on our common stock if dividends are not declared and paid, or made payable, on all outstanding preferred stock for the latest completed dividend period.
For additional information regarding dividend restrictions and financial covenants, where applicable, see Note 11. "Indebtedness," Note 17. "Equity," and Note 22. "Statutory Financial Information, Capital Requirements, and Restrictions on Dividends and Transfers of Funds" in Item 8. "Financial Statements and Supplementary Data." of our 2025 Annual Report.
Line of Credit
On June 30, 2025, the Parent entered into a Credit Agreement with the lenders named therein (the "Lenders") and Wells Fargo Bank, National Association, as administrative agent ("Line of Credit"). Under the Line of Credit, the Lenders have agreed to provide the Parent with a $100 million revolving credit facility that can be increased to $200 million with the Lenders' consent. The Line of Credit will mature on June 30, 2028, and has a variable interest rate based on the Parent's debt ratings. In Second Quarter 2026, we executed a $1.0 million overnight borrowing on the Line of Credit as a periodic validation of processes for accessing capital and liquidity resources. No additional borrowings were made under the Line of Credit in Six Months 2026. For additional information regarding the Line of Credit and corresponding representations, warranties, and covenants, see Note 11. "Indebtedness" in Item 8. "Financial Statements and Supplementary Data." of our 2025 Annual Report.
Four Insurance Subsidiaries are members of Federal Home Loan Bank ("FHLB") branches, as shown in the following table. Membership requires the ownership of branch stock and includes the right to access liquidity. All Federal Home Loan Bank of Indianapolis ("FHLBI") and Federal Home Loan Bank of New York ("FHLBNY") borrowings are required to be secured by investments pledged as collateral. For additional information regarding collateral outstanding, refer to Note 4. "Investments" in Item 1. "Financial Statements." of this Form 10-Q.
Branch Insurance Subsidiary Member
FHLBI
Selective Insurance Company of South Carolina1
Selective Insurance Company of the Southeast1
FHLBNY
Selective Insurance Company of America
Selective Insurance Company of New York ("SICNY")
1These subsidiaries are jointly referred to as the "Indiana Subsidiaries" because they are domiciled in Indiana.
The Line of Credit permits aggregate borrowings from the FHLBI and the FHLBNY up to 10% of the respective member company's admitted assets for the previous year. SICNY is domiciled in New York, which limits its FHLBNY borrowings to the lesser of 5% of admitted assets for the most recently completed fiscal quarter or 10% of the previous year-end's admitted assets. As of June 30, 2026, we had remaining capacity of $690.5 million for FHLB borrowings, with a $28.6 million additional stock purchase requirement to allow the member companies to borrow their remaining capacity amounts.
Short-term Borrowings
We made no material short-term borrowings from FHLB branches during Six Months 2026; however in Second Quarter 2026, we executed an insignificant overnight borrowing from FHLBNY as a periodic validation of processes for accessing capital and liquidity resources.
Intercompany Loan Agreements
The Parent has lending agreements with the Indiana Subsidiaries, approved by the Indiana Department of Insurance, that provide the Parent with additional intercompany liquidity. Like the Line of Credit, these lending agreements limit the Parent's borrowings from the Indiana Subsidiaries to 10% of the admitted assets of the respective Indiana Subsidiary. The outstanding balance on these intercompany loans was $35.0 million as of both June 30, 2026 and December 31, 2025. The remaining capacity under these intercompany loan agreements was $198.0 million as of both June 30, 2026 and December 31, 2025. We have other insurance regulator-approved intercompany agreements that facilitate liquidity management between the Parent and the Insurance Subsidiaries to enhance flexibility.
Capital Market Activities
The Parent had no private or public stock issuances during Six Months 2026.
During Six Months 2026, we repurchased 713,434 shares of our common stock under our existing share repurchase program for $61.9 million, excluding commissions paid and estimated excise tax. We had $108.1 million of remaining capacity under our share repurchase program as of June 30, 2026. For additional information on this share repurchase program, refer to Note 17. "Equity" in Item 8. "Financial Statements and Supplementary Data." of our 2025 Annual Report.
Uses of Liquidity
The Parent uses the liquidity generated from the sources discussed above to pay dividends to our stockholders, among other things. Dividends on shares of the Parent's common and preferred stock are declared and paid at the discretion of the Board of Directors ("Board") based on our operating results, financial condition, capital requirements, contractual restrictions, and other relevant factors. Our Board declared:
• A quarterly cash dividend on common stock of $0.43 per common share payable on September 1, 2026, to holders of record as of August 17, 2026; and
• A quarterly cash dividend of $287.50 per share on our 4.60% Non-Cumulative Preferred Stock, Series B (equivalent to $0.28750 per depositary share) payable on September 15, 2026, to holders of record as of August 31, 2026.
Our ability to meet our interest and principal repayment obligations on our debt and our ability to continue to pay dividends to our stockholders is dependent on (i) liquidity at the Parent, (ii) the ability of the Insurance Subsidiaries to pay dividends, if necessary, and/or (iii) the availability of other sources of liquidity to the Parent. Our next borrowing principal repayment is $60 million to FHLBI due on December 16, 2026.
Restrictions on the Insurance Subsidiaries' ability to declare and pay dividends without alternative liquidity options, could materially affect our ability to service debt and pay dividends on common and preferred stock.
Capital Resources
Capital resources ensure we can pay policyholder claims, furnish the financial strength to support underwriting insurance risks, and facilitate continued business growth. At June 30, 2026, we had GAAP stockholders' equity and statutory surplus of $3.7 billion. With total debt of $901 million at June 30, 2026, our debt-to-capital ratio was 19.7%. For additional information on our statutory surplus, see Note 22. "Statutory Financial Information, Capital Requirements, and Restrictions on Dividends and Transfers of Funds" in Item 8. "Financial Statements and Supplementary Data." of our 2025 Annual Report.
Our current and long-term material cash requirements associated with (i) loss and loss expense reserves, (ii) contractual obligations under operating and financing leases for office space and equipment, and (iii) notes payable, funded primarily with operating cash flows, have not materially changed since December 31, 2025. The Insurance Subsidiaries' net loss and loss expense reserves duration was 3.0 years at December 31, 2025.
The following table summarizes certain contractual obligations we had at June 30, 2026, that may require us to invest additional amounts into our investment portfolio, which we would fund primarily with operating cash flows.
($ in millions) Amount of Obligation
Fixed income securities $ 556.3
Alternative investments 331.7
Equity securities 15.3
CMLs 15.2
Total $ 918.5
There is no certainty (i) these additional investments will be required or (ii) about the timing of funding. We expect to have the capacity to fund these commitments through our normal operating and investing activities as they come due.
Our other cash requirements include, without limitation, dividends to stockholders, capital expenditures, and other operating expenses, including commissions to our distribution partners, labor costs, premium taxes, general and administrative expenses, and income taxes.
As of June 30, 2026 and December 31, 2025, we had no (i) material guarantees on behalf of others and trading activities involving non-exchange traded contracts accounted for at fair value, (ii) material transactions with related parties other than those disclosed in Note 18. "Related Party Transactions" in Item 8. "Financial Statements and Supplementary Data." of our 2025 Annual Report and Note 14. "Related Party Transactions" in Item 1. "Financial Statements." of this Form 10-Q, and (iii) material relationships with unconsolidated entities or financial partnerships, such as structured finance or special purpose entities, established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes. Consequently, we are not exposed to any material financing, liquidity, market, or credit risk related to off-balance sheet arrangements.
We continually monitor our cash requirements and the capital resources we maintain at the holding company and Insurance Subsidiary levels. As part of our long-term capital strategy, we strive to maintain capital metrics that support our targeted financial strength relative to the macroeconomic environment. Based on our analysis and market conditions, we may take a variety of actions, including, without limitation, contributing capital to the Insurance Subsidiaries, issuing additional debt and/or equity securities, repurchasing existing debt, repurchasing shares of the Parent's common stock, and adjusting common stockholders' dividends.
Our capital management strategy is intended to protect the interests of the Insurance Subsidiaries' policyholders and our stockholders, and to enhance our financial strength and underwriting capacity. We have a strong capital base and high-quality underwriting portfolio, positioning us well to capitalize on potential market opportunities.
Book value per common share increased to $58.13 as of June 30, 2026, from $56.74 as of December 31, 2025. This increase was primarily attributable to $3.69 of net income per diluted common share, partially offset by a $1.25 increase in after-tax net unrealized losses on our fixed income securities portfolio and $0.86 in common stockholder dividends. The increase in after-tax unrealized losses on our fixed income securities portfolio was primarily driven by an increase in benchmark U.S. Treasury rates. Our adjusted book value per share, which is book value per share excluding total after-tax unrealized gains or losses on investments included in accumulated other comprehensive income (loss), increased to $60.56 as of June 30, 2026, from $57.91 as of December 31, 2025.
Cash Flows
Net cash provided by operating activities of $450 million in Six Months 2026 remained relatively flat compared to $451 million in Six Months 2025.
Net cash used in investing activities decreased to $338 million in Six Months 2026, compared to $799 million in Six Months 2025. Six Months 2025 was elevated as a result of investing proceeds from our $400 million, 5.9% Senior Note issuance in February 2025. These proceeds also drove the $324 million in net cash provided by financing activities in Six Months 2025, compared to net cash used in financing activities in Six Months 2026 of $119 million.
Ratings
Our ratings remain the same as reported in our "Overview" section of Item 1. "Business." of our 2025 Annual Report and are as follows:
Nationally Recognized Statistical Rating Organizations
Financial Strength Rating Outlook
AM Best Company A+ Stable
Moody's Investors Services
A2 Stable
Fitch Ratings ("Fitch") A+ Stable
Standard & Poor's Global Ratings
A Stable
On April 29, 2026, Fitch reaffirmed our "A+" rating with a "stable" outlook. In taking this rating action, Fitch cited our (i) business profile as having favorable competitive positioning within our core standard lines businesses, driven by strong independent agency relationships and (ii) strong capital position.
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